Earlier this summer, which by coincidence was on the 68th anniversary of the D-Day landings at Normandy, I met Herman at the Boar’s Head Inn to talk about the book, which he sums up as a story about “releasing the innate productive power of American business.”

Herman pointed out there were two business enterprises in Charlottesville that manufactured products that were critical to the American war effort.

Charlottesville’s war effort
One was Ix Mills, located where the Frank Ix building still stands south of downtown.

During the war, he said, Ix Mills “moved from making commercial textiles to making parachute cloth. They really became the center of the parachute cloth making for the Second World War.”

The soldiers “who jumped on D-Day” as portrayed in Stephen Spielberg’s film, Saving Private Ryan, as well as the “airmen who had to jump out over Germany and at sea during the Second World War were using Charlottesville-produced parachutes.”

Historian Arthur Herman

The other Charlottesville company that Herman discovered during his research was Southern Welding, which “made various kinds of iron piping and steel tubing. During the war, they shifted to making the steel tubing for aircraft, to contain all the electric lines and so on in B-24s and B-25s. What they also did, and their real breakthrough, is they developed the parts for arrester gear on navy aircraft carriers.”

The arrester gear allowed planes to land on the carriers without being pulled apart by a braking mechanism.

“Southern Welding, here in Charlottesville, developed the parts and manufactured the parts that went on aircraft carriers all across the Pacific. In fact, at one point, Charlottesville-made arrester gear and tailhook gear was on 43 separate aircraft carriers during the Second World War.”

Remembering D-Day
When Herman thinks about D-Day, in particular, he focuses on two things.

“First of all,” he explained, D-Day was about more than amassing military personnel “but also amassing a vast industrial effort.”

Two thirds of the landing craft and sea-going vessels used on D-Day were produced in American factories, he said, and “it’s a tribute not just to the bravery of our armed forces but also to the huge logistical possibilities that American industry could generate a landing and an enterprise of the sort that the world had never seen.”
The second thing about D-Day that comes to Herman’s mind is that “the very first Americans to get news that the landings were successful were the people working the night shifts in the factories on the East Coast.”

At the Bethlehem Shipyard in Sparrow’s Point in Baltimore, he recalled, “work stopped and everybody sank to their knees and said the Lord’s Prayer as they got the news.”

That, he said, is “really fitting, that the people who produced the tools that made that victory possible were the very first to learn that what they had done, and what they had contributed to, had been a success.”

Stated succinctly, the theme of Freedom’s Forge, is that the growth of industry during World War II was “far from being a kind of Washington, D.C.[-based], bureaucrat-driven production effort” and that, he explained, “what [it] really was about was releasing the innate productive power of American business.”

More widely, he said, the success of America’s wartime industrial production effort came “in spite of” government-imposed rationing and wage and price controls.

“The rationing that everybody remembers,” he pointed out, was the result of “government controls over the consumption of civilian goods.”

‘Minimal control’
For industrial goods needed by the military – airplanes, ships, weapons, and Jeeps – came about because, even before Pearl Harbor “the military learned it was best to let business and manufacturers handle it themselves,” and that it should be decentralized, Herman said.
“They learned that minimal control from Washington -- or even from the military services -- usually ended up getting products on time,” he explained, and “at a continually lower cost as well.”

That, he said, “was really the key ingredient in the whole wartime production effort,” the fact “that the manufacturers and producers found ways to constantly roll the costs down, so it was a huge boon not just for the American military, really giving us the tools to win World War II, but it was also a huge boon to American business and industry because they became leaner, more efficient operating organizations as a result of the wartime effort.”

The business executives and industrialists who are portrayed in Herman’s book – former General Motors president William Knudsen, road- and ship-builder (and health insurance pioneer) Henry Kaiser, Ford Motor Company’s Charles Sorensen, and others – are larger-than-life characters who seem to spring from the pages of an Ayn Rand novel, an assessment with which Herman agrees.

‘Creativity of the human mind’
“What Ayn Rand understood,” he said, “and one of the lessons that you get from her work, which is in some ways is reflected in this book, is that what the arsenal of democracy was really all about wasn’t ships and tanks and planes, any more than national wealth or an economy is about oil wells and gold mines and factories and industrial output or goods and services.”

Rather, he explained, “what it’s really about is creativity. It’s about the creativity of the human mind. It’s about vision. It’s about leadership and problem-solving.”

Throughout its history, he noted, American business has “been really at the forefront of all of those aspects. That’s what drives American business. That’s what drives American civilization.”

What Herman “wanted to chronicle is just how this episode in our history, a crucial moment in world history as well as for the United States, really reflected all of those kinds of powerful virtues that someone like Ayn Rand realized were at work in a free market economy.”

Those characteristics, he said, are “clearly on show in people like Bill Knudsen, the man [whom] Roosevelt brought to construct a system by which you could get this bottoms-up, free-market, private-sector drive to production,” as well as “the other characters [readers will] meet in the book.”
Herman’s previous books, he explained, were “on topics as various as how the Scots invented the modern world and the contribution of the Scottish enlightenment to modern civilization.”

He also wrote a book on the British navy, called To Rule the Waves. Herman explained that “Freedom’s Forge is in some ways an outgrowth” of the research on that earlier book, as he “became more and more interested in the relationship between economics and modern warfare and the links between those two things.”‘Innate productive power’
What Freedom’s Forge does, he said, is “turn the whole story of how the United States got ready for World War II on its head.” The book argues that, “far from being a kind of Washington, D.C., [led], bureaucrat-driven production effort, what this really was about was releasing the innate productive power of American business.”

Herman’s thesis seems counterintuitive to people whose idea of economics during the Second World War is limited to rationing of sugar, butter, gasoline, and automobile tires.

The war production effort, Herman asserts, succeeded “in spite of” that kind of centralized control, noting that “the rationing that everybody who lived through that period remembers” was about “government controls over the consumption of civilian goods.”

The war production effort began even before Pearl Harbor, “starting in the summer of 1940,” Herman said, and “what the military learned was it was best to let business and manufacturers handle it themselves.”

The War Department, he explained, and President Roosevelt himself “learned that minimal control from Washington or even from the military services usually ended up getting products on time -- getting the tanks and planes and ships built -- at a continually lower cost as well”

The “key ingredient” of wartime production, Herman said, “is that the manufacturers and producers found ways to constantly roll the costs down, so it was a huge boon not just for the American military, giving us the tools to win World War II, but it was also a huge boon to American business and industry because they became leaner, more efficient operating organizations as a result of the wartime effort.”

Quirky and surprising
While doing his research, Herman came across a few quirky stories and surprising facts.

“One that will completely surprise people when they read the book,” he said, “because it’s so at variance from our usual textbook image” that the United States was caught off-guard by the Pearl Harbor attack.

In fact, “the war production effort was well underway well before Pearl Harbor,” Herman pointed out.

“As I explain in the book, it really began in the summer of 1940 when Roosevelt realized war is going to come” and that he had to get the country ready for it,” so FDR called “Bill Knudsen, president of General Motors, and says, how do I do it?”

With the system that Knudsen put in place, with Roosevelt’s blessing, Herman continued, “far from being caught off guard, we had gone from a standing start to a wartime production that was fast approaching that of Hitler’s Germany. A lot of people don’t realize that but this is in fact what American industry could do.”

There was a second surprise that Herman discovered.
“The most interesting statistic, stunning statistic that came out of my research was that in 1942, as this war production effort is going on, the number of Americans killed or injured in war-related industries surpassed the number of Americans in uniform killed and wounded in action in the war by a factor of 20 to 1,” he said.

The civilian sector of “what we call the Greatest Generation were [not] just sitting at home or just comfortably handling jobs while people in uniform were out risking their lives at sea and on land and in the air,” he said.

To the contrary, he explained, war production was “incredibly dangerous work. It involved enormous sacrifice from lots of people, including business executives. One hundred eighty-nine General Motors senior executives died on the job during the war.”

Summing up, Herman said that what is “really the thesis of the book” is that “this was a huge effort [that] was made possible by the productive forces that are part of a free-market American economy,” and not by any centralized planning devised in the Pentagon or the Washington bureaucracy.

Tuesday, April 17, 2012

An unexpected story from an unexpected place -- Cartageña, Colombia -- has dominated the nation's attention over the past few days. It has been the subject of congressional hearings and newspaper headlines. Last night, in fact, all three major broadcast networks led their evening news programs with the story.

Created by Abraham Lincoln to investigate currency counterfeiting (signing the authorizing legislation on the day of his assassination), the U.S. Secret Service remained part of the Department of the Treasury until 2003, when it became part of the new Department of Homeland Security. It became the protective security force for the President after William McKinley was assassinated in 1901.

‘Startling’ revelations
Kessler “wanted to find out what the presidents are really like and what better way [to do that] than to interview Secret Service agents,” he explained, noting that members of the Secret Service “are very secretive, even more secretive than the FBI or the CIA.”

Still, over more than forty years as a journalist, Kessler had developed sources within the agency and he was able to uncover information that was “pretty startling.”

His book goes back to the Eisenhower years but really picks up during the Johnson administration.

Lyndon Johnson, he said, “was totally out of control, a real maniac. He would sit on the toilet and defecate in front of aides.” During press conferences on his Texas ranch that included female journalists, he would “urinate in front of them.”

In addition to these intimidating actions, Kessler noted, Johnson “would have sex with his secretaries, even in the Oval Office” while “the press covered it up at the time.”

Phony and genuine
Jimmy Carter, he said, “was known as the phoniest president by the Secret Service. He would pretend to carry his own luggage in front of the cameras but actually the luggage was empty.”

Ronald Reagan, on the other hand, “was genuine,” Kessler said, and he “liked to schmooze with the agents.”

Captains of Air Force One during the Reagan administration told Kessler that “every time Reagan got into the plane he would come into the cockpit and greet the captain. Jimmy Carter did that once in his whole four-year term.”

‘Bizarre tale’ of Bush 41
Among the more surprising tidbits that Kessler picked up was a “bizarre tale” from the George H.W. Bush administration.

President Bush was visiting Enid, Oklahoma, Kessler explained, and the Secret Service followed its normal protocol by checking with local law enforcement about any kind of threats that might have surfaced in the vicinity.

The local police “said there’s this psychic in town who has been incredibly reliable in the past and has actually led us to bodies of murder victims.”

This psychic, they said, had had a vision that Bush was going to be assassinated by a sniper at an overpass when he came to Enid.

Although they found it embarrassing to do so, the Secret Service followed up with the psychic and asked her if she had any other details.

To their surprise, Kessler recounted, she knew where the limousine that would transport the President was housed, even naming the precise hangar at a nearby Air Force base.

She also predicted that “when Bush gets out of the plane, he’s going to be wearing a sport jacket.”

The Secret Service agents thought “that was crazy” because the President would “be wearing a suit,” as Bush, a stickler for formality, always did.

But “sure enough,” Kessler continued, “when he got out of the plane, he was wearing a sport jacket. As a result of that, they changed the motorcade route so it would not go under any overpass and, of course, he was safe -- and he’s reading about it for the first time in this book.”

At a recent Cato Institute event, Professor Epstein spoke to me about his new book and his next project, a book about classical liberalism and constitutional law.

Design for Liberty, he said, differs from his previous books in that “it’s a little bit more philosophical. It spends much more time talking directly about public administration, which I have not talked about much in previous books.”

Moreover, Epstein added, it reflects his “newfound interest in public administrative law, which is usually missing from the earlier works, and of course, it has material which I could never have covered earlier because things like the Dodd-Frank [banking] statute and the current health-care bill are creatures of the last year or so and therefore I never spoke about them before.”

First and second order rules
Digging further beneath the surface, Epstein pointed out that his new book contains “a fairly detailed explanation of first and second order rules, a sort of technical subject,” which involves the question of “when is it that you have to have to resort to reasonableness rules?”

Richard Epstein

That happens, he said, when “it turns out that hard-line rules don’t work and what you have to do in order to make the rule of law work is to understand that the mere fact that there’s a reasonableness in some legal system doesn’t disqualify from the rule of the law.”

“On the other hand,” he argued, “you can’t let reasonableness determinations overwhelm the whole system, so I try to develop protocols to how it is that you separate those things.”

Epstein’s next project will be what he describes as “a very long book” with the working title “The Classical Liberal Constitution.”

That book, he said, is “about 90 percent done.”

Progressive vs. classical liberal
In it, Epstein “takes the fundamental insights that I’ve developed over the years and basically gives a comprehensive analysis of every major constitutional area with a hell of a lot of compression, but it starts with basic theories of constitutional interpretation. It talks about the conflict between the progressive and the classical liberal visions. Those,” he said, “are things I’ve talked about before.”

Epstein’s forthcoming book “goes through systematically the judicial, the executive, and legislative branches, and then does all the various threads of individual rights, each getting a chapter.”

Unlike Design for Liberty, “which is slim,” The Classical Liberal Constitution “will be fat,” he said, with a likely publication date in late 2012 or early 2013.

“It’s been a book that’s been in the making for many years now,” Epstein explained. “It’s an effort to give a comprehensive way in which, if you take the positions that I do, various cases and various issues have to come out.”

The Classical Liberal Constitution will have “some stuff on takings, but that’s not the main focus on it. It has things on freedom of religion and executive power and foreign affairs and so forth.”

Epstein concedes that his “knowledge base is not uniform across all these areas but what makes it possible to do this project is that the Supreme Court doctrine generally tends to be comprised in a relatively few key cases.”

Consequently, “if you have a strong theory, and you pick the right cases to read, you can write the kind of book that I’m talking about.”

Across the country over the past few years, state legislatures have been considering and passing laws in reaction to the Supreme Court’s decision in Kelo v. City of New London (2005), which stated that governments could use eminent domain to take property from one private owner and give it to another private owner, if the transfer of property results in a “public purpose” such as more jobs or more tax revenues.

In a scathing dissent in that case, Justice Clarence Thomas memorably wrote:

“Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.”

Fourteen years earlier, there had been a striking moment in then-Judge Thomas’s confirmation hearings when then-Senator Joseph Biden held up a book called Takings: Private Property and the Power of Eminent Domain, which Epstein wrote, and asked Thomas, essentially, if he believed what was in it.

That dramatic moment thrust legal scholar Richard Epstein into the public consciousness as the pre-eminent legal advocate for protecting private property against the intrusions of government. That is why asked him about the legal environment in the post-Kelo years and the affect that might have on future legislative attempts to protect against eminent domain abuse.

“No one is satisfied,” he said, with how the reactions to Kelo have played out over the past six years.

“This is the basic breakdown,” Epstein explained. “There are a few states which have fairly severe changes, some of them judicially, some otherwise. Michigan and Ohio, for example, are two.”

In addition, “many states have cosmetic changes, which require administrators to think more deeply before they do terrible things,” he pointed out, “and some states have relatively nominal requirements.”

Among these various regimes, he explained further, “the real difference turns out not to be in the law, it turns out to be in the practice.”

The reason is, he said, is that “once the Kelo situation came down, it raised the political cost to anybody who now wants to engage in taking of private property, particularly if it turns out to be a residential home.”

Epstein recalled a 1984 Supreme Court decision, Hawaii Housing Authority v. Midkiff, with a majority opinion written by Justice Sandra Day O’Connor, who also wrote the principal dissent in Kelo.

Midkiff, Epstein explained, “was hugely capacious, but it didn’t raise any hackles, because what was being condemned was a non-possessory interest.” It involved a “landlord’s interest in property” rented to tenants “and people, frankly, didn’t care [because] ‘these guys are landlords; they’re interested in money; we’ll give them a different stream of money.’”

Unlike Midkiff, he noted, “Kelo threw people off their property. And it threw them off their property for no reason at all.”

A person doesn’t “have to be a genius,” Professor Epstein said, “to figure out that when somebody’s thrown out of their house, which is ripped down by a pitchfork, you’d better have a very powerful justification for doing that.”

In Kelo, the justification was “real estate development, which is a sort of a bad end anyhow, but worse than that,” he continued, “there was no real estate development that required the use of that land.”

Consequently, Kelo “was an exercise in a dubious end and a crazy set of means. The two of those things together turned out to be really explosive and so now, both on the ends chosen and the means used to achieve it, there’s more scrutiny, which takes place as sort of an automatic administrative matter.”

Whether this sort of political scrutiny of local administrators is a sufficient brake on eminent domain abuse and a substitute for statutory or constitutional guarantees is a question that legislators will continue to ask.